Best way to choose a trading site
When deciding between online trading sites, it is important to understand your investing goals and personal circumstances. Before you make your choice, assess your funds, risk tolerance and trading experience.
Steps on how to Choose a Trading Site
One of the first things to consider before choosing which trading platform to invest your money and time on are fees. While trading can be a profitable way to invest, commissions and fees can really eat into your profits, so choosing an affordable platform is essential. There is significant variance between trading platforms when it comes to fees, but in general, you should be aware of the following charges when selecting a platform:
The first expense you will have to face when online trading is the minimum deposit. Trading platforms often charge minimum deposits, which are not actual fees because it is money that will be immediately available in your account once you deposit it, however it is worth keeping in mind especially if your capital is limited in which case you may need to raise funds to begin trading. The lowest minimum deposit platform is Stash Invest, which requires $5 only to place your first trade, making it the best trading platform for investors who may have a limited capital to begin with. This is followed by $50 at eToro (for US customers) and $100 at Plus500.
Trading fees are the most common when it comes to online trading platforms. These include commissions and spreads. Brokers may charge fixed spread, variable spread or commission based spreads. It is important that you read about the platform’s trading fees in detail before you begin trading as this can affect your bottom line. Some brokers may also have hidden overnight trading fees. eToro is a great choice for U.S. customers as they have one of the most affordable, transparent trading fees.
Non-trading fees relate to transaction fees, withdrawal fees and so on. The best choice if we consider non-trading fees alone is Plus500. The platform does charge fairly high trading fees, but it does not charge any non-trading fees. Below we explain some common non-trading fees:
Deposit fees are applied when you send money to your trading account from your bank account. Most platforms tend to offer free deposits, but if you are depositing funds with an international bank card, you should watch out for conversion rate fees.
Some brokers may charge a fee when you withdraw your funds. eToro, for instance, charges $5 fee on all withdrawals. The minimum withdrawal amount is $50.
Inactivity fees: Many trading platforms also charge an inactivity fee when you stop trading for a given period of time. This means that yiu need to be strategic about your trading activity to avoid getting charged after a longer time of no trade. If you are a buy and hold investor, you may want to avoid platforms with such fees.
Account fees: It is not uncommon for some trading platforms to charge an account fee in the form of flat monthly payments, especially when it comes to share dealing or stock trading platforms such as IG. None of the platforms in this article charge account fees.
The trading tools available depend on the actual trading platform you are using. We consider MetaTrader4 or MT5 to be the best trading platforms out there. The only broker out of the ones we listed that uses MT4 is Libertex. The other platforms use different types of trading spaces, even though they are equally efficient.
Speed and order execution
The execution speed is a vital element to consider especially for a day traders. When trading or investing in fast-moving markets, the difference between losing and gaining thousands of dollars can boil down to a few milliseconds. Therefore, we suggest making sure that the platform you choose can keep up with your trading demands.
Some trading platforms offer the copy trading option, which allows traders to place the same trades as professional traders. This particular feature is what makes eToro stand out from the crowd. We consider it to be one of the best social trading brokers, and an ideal choice if you are a beginner and do not have a clear trading strategy in mind yet.
3. Asset Classes and Variety
Another thing to consider when choosing your online trading platform are the types of assets they offer and the variety. Asset variety and diversification are one of the most fundamental trading strategies and can help take your trading to the next level by balancing your portfolio and offsetting risks.
Regulation is another important factor to consider when choosing an online trading site. Whenever we review trading platforms, one of the first things we look at is whether or not they are regulated by financial bodies.
Holding a license means that agencies monitor how the investment firm’s operations closely. To maintain their regulatory status, the company has to abide by rules designed to protect the interests of customers.
Usability has to do with the ease of use of the trading platform in general as well as the sign up and verification process. After all, if you are serious about investing, you may end up spending a lot of time on the platform, so you want to avoid as many obstacles as possible. All the platforms we recommend have fairly simple sign up processes and intuitive interfaces.
Another thing to take into account in online trading is that many people confuse complexity with effectiveness. Most novices get overwhelmed when they find a platform that offers multiple features. They think that a complicated platform translates to an effective one and forget the concept of user-friendliness. Getting access to numerous features will not make you a successful trader.
A trading space that you find too complicated may actually overwhelm you and prevent you from making the most out of your trading experience. Make sure you familiarise yourself with the broker’s platform before you start investing on it. If you do not feel comfortable with it, we suggest moving on to a different trading platform.